The rise of the Mobile Wallet

June 26, 2012

I recently had to sprint to make the next Luas which was fast approaching in three minutes. Arriving at the platform with one minute to spare I was greeting by a small queue of two people, still plenty of time to purchase a ticket one would think. The first customer fumbled with their change resulting in their fare forcefully being slotted in the vending machine repeatedly. The second customer didn’t seem to recall the ‘no copper change’ rule. As a shuffled from foot to foot, deeply troubled at the speed at which these transactions were happening a thought struck me, ‘wouldn’t it be easier to just jump on the Luas and pay via my phone on route’.

Not exactly an Einstein thought provoking theory but it did start me thinking about the challenges and limitations we still face using our smart phones as a financial tool that soon may no longer be. Some experts say the credit card, and maybe even the physical wallet, could be extinct in the near future . How funny to think the wallet may be the next typewriter in a few years, objects we simply do not use anymore.

Using one’s handset as a financial tool, or the mobile wallet is an interesting concept which is becoming increasingly popular. Not only does it allow users on the move to access financial accounts, but also plays an integral part in the development of digital commerce and banking.

I read recently in the Digital Times that British Banks Royal Bank of Scotland and Natwest have launched a system whereby customers can withdraw cash from an ATM using a code from their phone rather a bank card. The Smartphone app called ‘Get Cash’ allows users to request up to £100 by entering a six-digit code generated through the Smartphone into the ATM. What a novel idea! Imagine the possibilities where this app would help avoid a mini crisis, a stolen wallet abroad, you left your wallet at home and want to buy the weekly shop or simply just want to help a friend in trouble. The rules being codes will be valid for three hours and the people withdrawing the cash would not be able to take out more or less then the specified amount.

Ubiquity, instancy, bank-grade security and utility all play a part in making consumers increasingly active in using financial services via mobile not to mention convenience. It seems hard to believe that less than a year ago mobile banking Smartphone facilities were not available to Irish consumers. Nowadays customers can check their account balance, view mini statements, make payments, and make mobile top ups. Mobile banking has become so popular that independent research has shown that UK consumers with mobile money apps check their accounts on average 16 times a month – three times as often as those who log in to internet banking.

However it’s not just Mobile banking that is driving the rise of the whole money mobile industry. High expectations from consumers command more functions, faster speed and interoperability with other mobile-supporting platforms. Near field communication (NFC) is a technology provider that makes life easier and more convenient for consumers around the world by making it simpler to make transactions, exchange digital content, and connect electronic devices with a touch. While this technology opens up the possibility of tapping or waving a mobile to pay for goods, mass commercial rollouts remains slow. The main reasons proving the complexity for service providers such as banks, mobile network operators and retailers of supporting a range of devices, with integrated bank-grade security applications.

There is no question we are in the midst of a fast-growing and dynamically innovative industry as three factors align: explosive growth in mobile data, convergence of mobile banking and mobile payments, and the rise of mobile commerce. The next few years will be extremely exciting for the mobile wallet; I look forward to reading about the formation of larger alliances and deeper ecosystems between financial services, retail and mobile.

Mostly, I look forward to not having to run for a Luas knowing I can get on!